Russia nearly doubles pensions in Crimea

Moscow

Moving quickly to envelop Crimea in the Russian bureaucracy and economy, the Kremlin says it has nearly doubled pensions paid to retirees on the peninsula, raising them to the average levels paid in Russia.

President Vladimir Putin signed a decree raising pensions and another increasing salaries for public sector workers such as teachers and doctors, according to a statement posted on the Kremlin's website on Monday. Officials also announced a number of new investment plans and tax breaks for Crimea, which Russia seized from Ukraine two weeks ago after a rushed vote in the Crimean Legislature. The Crimeans even realigned the clock, moving theirs ahead two hours, to be identical with Moscow's time zone.

To reinforce the message from Moscow, Russian Prime Minister Dmitry Medvedev travelled to the region's capital to hold a meeting with members of the cabinet and local officials.

Russian Prime Minister Dmitry Medvedev, left, speaks to local citizens after a wreath laying ceremony at the World War II memorial in Sevastopol, in Crimea, Monday. Photo: AP

In what US officials interpreted as an encouraging sign on Monday that Russia would not invade other regions of Ukraine, the German government released a statement saying Mr Putin told Chancellor Angela Merkel in a telephone call that he had ordered a partial withdrawal of Russian troops massed on Ukraine's eastern border, a source of great tension with Western governments in recent weeks.

The German statement characterised the troop movement as described by Mr Putin as "the partial withdrawal of Russian troops ordered from the eastern border of Ukraine".

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There was no direct confirmation from Russian officials. The Kremlin's statement describing the same telephone conversation made no mention of any troop withdrawals. It said only that the leaders "discussed various aspects of the situation in Ukraine, including the possibility for international involvement in restoring stability" and that the pair had also talked about constitutional reform in Ukraine and another troubled region of Eastern Europe, the separatist Transnistria region of Moldova.

The Defence Ministry posted a statement saying one mechanised battalion, a unit that would typically consist of about 500 men, had completed exercises in the Rostov region, which is on the border with Ukraine, and was returning to base elsewhere in Russia.

The troops had simply completed their exercises, the statement said, without clarifying whether this relatively modest troop movement signalled any broader pull-back from the Ukrainian border.

US officials, who estimate the Russians have deployed 40,000 to 50,000 troops near the Ukrainian border, reacted positively to the apparent pull-back, whatever its size.

"If reports that Russia is removing some troops from the border region are accurate, it would be a welcome preliminary step," said Jen Psaki, the State Department spokeswoman. "We would urge Russia to accelerate this process. We also continue to urge Russia to engage in a dialogue with the government in Kiev to de-escalate the situation, while respecting the sovereignty and territorial integrity of Ukraine."

Mr Medvedev's visit was also a show of defiance to the West, coming just hours after Secretary of State John Kerry and Russia's foreign minister, Sergey Lavrov, failed to agree on a diplomatic solution to the Crimean crisis at late-night talks in Paris. Mr Kerry called the annexation "illegal and illegitimate".

Mr Medvedev said Crimea would become a special economic zone with tax breaks for businesses that invested in the region.

Russia's retirement benefits are not high by developed country standards but are higher than those in Ukraine. This makes the annexation appealling for some residents of the peninsula, a region that is home to many Soviet military veterans.

The average monthly pension in Russia in 2013 was about 10,000 rubles, according to the RIA state news agency, or $A300 at the current exchange rate. In comparison, the average pension in Ukraine last December was $A172. Raising retirement benefits on the peninsula is sure to prove popular, though its cost compared with the size of Russia's budget is only modest. About a third of Crimea's 2 million people are retirees. Russia, excluding the newly annexed region, has a population of 143 million. At a recent cabinet meeting, Mr Medvedev said increasing pensions to Russian levels would cost about $A1.08 billion this year.